At Hanoi-based Vietnam Business Forum (VBF) on December 12—a policy dialogue between the Vietnamese government and the business community—Prime Minister Nguyen Xuan Phuc highlighted new trends and opportunities that will have positive impacts on enterprises.
Specifically, Vietnam is witnessing a rapid rise in the middle class. According to the ‘Vietnam 2035’ report—a joint Vietnam-World Bank Group study launched last year—the middle class makes up 10 per cent of Vietnam’s population now and is forecasted to rise to 50 per cent by 2035. Studies of high-profile organisations also showed the same results.
“This will change the economy’s consumption structure, giving many new business opportunities to enterprises,” Phuc said.
He also highlighted strong changes in the Vietnamese IT industry featuring the gradual development of automation and artificial intelligence. Vietnam has more than 52 million Internet users (over 54 per cent of the total population), ranking fifth in the Asia-Pacific region. Also, 55 per cent of the Vietnamese population use smart phones. It is expected that by 2020, Vietnam will sit atop the region, with 80 per cent of its population using smart phones.
“This is a very important foundation and a big opportunity for potential investors who will find it easier to sell their products and services to Vietnamese customers,” Phuc said.
He also committed that the government will create all favourable conditions to “foster innovation and initiatives. More opportunities will be offered to private firms via the restructuring of state-owned enterprise, finance and banking, and public investment sectors. Additionally, financial burdens on enterprises will be reduced.”
“Especially in the short term, the government will continue to flexibly use fiscal and monetary tools to uphold the economy, generate employment, and improve people’s income,” the prime minister stressed.
He also underscored the role of businesses in socioeconomic development, stating, “You are the very shapers of Vietnam’s future economy. You are also both an important driving force and a tool for the government to realise its vision and aspiration to build a more affluent Vietnam where the government plays a facilitating role for development.”
“Every single penny invested by enterprises in the economy not only benefits enterprises and investors, but also acts as a ‘vote of confidence’ for the government, ministries, and sectors and their efforts to boost reforms and construct a conducive administrative system,” he stressed. “Such investment capital also encourages the government and the business community to join hands for mutual development in the common house of Vietnam.”
VBF’s Investment and Trade Working Group sees Vietnam as a good investment destination for foreign firms, and notably as “a shining example of the potential benefits of global trade.”
Vietnam has developed quickly from a state of having virtually no trade in 1990 to become one of the world’s most significant exporters of garments and footwear, seafood, key agricultural products, such as rice, coffee, and spices, furniture, and more recently even electronic products and software, according to VBF’s Investment and Trade Working Group.
However, while highly commending Vietnam’s efforts to boost economic growth and reform the business climate, the foreign business community has also made some recommendations for the country’s brighter economic prospects.
Tomaso Andreatta, vice chairman of EuroCham, stated that the government should have more solutions to create a more business-friendly climate, as unexpected policies are still affecting foreign firms.
“We do not come here only to make shirts and shoes or to assemble electronics, but to develop the entire supply chain and all the sophisticated services that support it. To bring these here, our companies need sophisticated employees who speak foreign languages and they need reassurance that intellectual property rights are effectively protected.”
AmCham’s chairwoman Natasha Ansell also recommended that the local business environment be even friendlier. She said American companies have invested billions of dollars in Vietnam, helping to integrate the country into the global supply chain, creating quality jobs for Vietnamese workers, and opening a new market for US goods and services.
“Our members need greater reform efforts that help create a fairer and more competitive environment where decisions are made faster, procedures are less complicated, rules are fairly enforced, and companies compete on their merits—including access to land and opportunities,” Ansell stressed.
Vietnam Investment Review